April 7, 2021Read More
In a November 11th Harvard Business Review article, Vijay Govindarajan (Coxe Distinguished Professor at Dartmouth Tuck) and Anup Srivastava (Canada Research Chair in Accounting, Decision Making, and Capital Markets) outline the urgency for business schools to evolve their MBA programs to meet the needs of the digital age. That is, if they want to stay relevant and “…keep the MBA degree future-proof.”
The authors argue that the MBA emerged to train managers for the leading 20th century corporations such as Ford, General Electric, General Motors, and U.S. Steel, and that MBA programs were set up to imitate the departmental structures within those companies to include finance and accounting, production and operations management, and marketing and human resources. These companies considered land, buildings, and machines – a physical infrastructure for the production of goods – as their key assets. But the leading 21st century corporations, what the authors call digital natives, including Alphabet (Google), Apple, Amazon, Google, Meta (Facebook), and Microsoft, consider their key assets to be knowledge and innovation – talent – as well as subscriber networks.
The authors maintain that this change needs to be reflected in how business schools’ main departments are structured. For instance, corporate finance should include soft assets when defining the real asset base of a company because they’re now the dominant asset class in 21st century companies. The authors define soft assets to include brands, first-mover advantage, information technology, talent, and competitive strategy. Including these in the calculation of a company’s assets will yield a more accurate return on assets calculation.
Marketing, likewise, has changed substantially in the digital age where information is distributed freely and rapidly across the internet. Marketing now is both data-driven and focused on engagement, and the authors advocate for business school marketing departments to work closely with IT and digital strategy for a more integrated approach.
In this digital age of knowledge and information, the challenge the authors see for human resources and organizational behavior is in managing talent. Rather than staying at the same company in the same job until retirement, employees now grow their knowledge and then move on to another company for a position that fits better or to start their own company. Additionally, an increasing number of workers are freelancers who aren’t handled by the HR department at all. There’s also a growing emphasis on diversity and inclusion in the workplace, and business schools are making an effort to address those issues. However, business schools haven’t paid as much attention to immigration issues. In the digital age, skilled immigrants play a vital role in tech companies, and those companies need managers who are prepared to address cultural and language differences, as well as family resettlement.
Finally, the authors make the case for not only structural changes within the departments, but for an increase in cross-pollination between the departments; for shifting the focus to train managers in creativity, empathy, leadership, and crisis management among others, to meet the needs of 21st century corporations.